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Mercedes and the Concorde Agreement

It is probably a very sensible thing that Mercedes-Benz is keeping quiet about Concorde Agreement negotiations. That is the best way to get a solution that suits the German manufacturer.

Several of the teams have agreed basic terms for a new Concorde Agreement. Not all of them are happy with what has been agreed, but you get what you can get based on your importance to the sport. The Formula One group does not think that Mercedes is that important. The Germans disagree. This is the crux of the problem.

Having said that, there is little doubt that it would suit some of the other teams if the deal under discussion blew up and things had to start again. The details of the next Concorde Agreement, which is due to run from the start of next year until the end of 2020, are not in the public domain, if indeed they have been decided already. What is clear, from a statement made by the Formula One group, is that some of the teams have agreed “in principle” deals. In order to get this to happen there was no small amount of wheeling and dealing and some pretty advanced arm-twisting. The primary aim was to break up the unity of the Formula One Team Association (FOTA). Although Ferrari was central to establishing FOTA and the other teams tried to trust the Italian team, it proved – as has happened before – that there will always be a point at which it puts its interests ahead of those of the sport as a whole. Once the Formula One group offered Ferrari enough, it dropped FOTA like a hot potato. Ferrari on its own is not powerful enough and so the Formula One group needed other FOTA scalps. Red Bull was reportedly offered a very substantial financial incentive to break away from FOTA, while the Bahraini shareholders at McLaren were encouraged to get that team to agree not to fight and Frank Williams was encouraged to listen to his old mate Bernie Ecclestone, rather than to Williams F1 chairman Adam Parr. The remaining teams – with one exception – are utterly irrelevant and must take whatever deal they are offered. Once FOTA was blown up, they had no other bargaining power.

The fly in the ointment was Mercedes-Benz which is big enough not to be pushed around and annoyed enough not to agree to a deal that it does consider suitable. There is an argument that additional payments to Ferrari can be justified under the competiton laws of Europe because the Italian team has such a important heritage in F1. That is worthy of discussion, but a similar arrangement with Red Bull Racing is more difficult to justify.

If one looks at the numbers it is fairly clear that the best that Red Bull can claim as an active team owner is that it has a team that dates back to 1995 when Sir Jackie Stewart set up a new organisation called Stewart Grand Prix. The firm that bears that UK company number went on to become Jaguar Racing in 2000 and, after the Ford Motor Company had messed things up royally, it landed in the hands of Red Bull at the end of 2004. Thus the best Red Bull can claim in heritage in the sport is 17 years. In that time the team has won two Drivers’ and two Constructors’ World Championships, in 2010 and 2011. One can add that the legal entity has won 29 victories (Red Bull’s 28, plus Stewart GP’s one-off win).

When it comes to historical status, Mercedes is hard to beat in overall motor racing terms. The company first appeared in motor racing in 1901. It competed in and won the Gordon Bennett Cup, the competition that preceded Grand Prix racing, which in turn preceded the Formula 1 World Championship. It won the Grand Prix de l’Automobile Club de France – the biggest event in Grand Prix racing – as early as 1908 and finished 1-2-3 in 1914. It was one of the dominant teams in the 1930s, winning 14 races in five years and was utterly dominant when it joined the Formula 1 World Championship for the first time in 1954 and 1955, winning nine victories.

The current Mercedes F1 team began life only in 2010, but that entity can trace its roots all the way back to January 1964 when Ken Tyrrell established the Tyrrell Racing Organisation. This became British American Racing in 1998, Honda GP in 2006, Brawn GP in 2009 and Mercedes GP at the end of the same year. If one looks at the numbers, the firm that bears the company number has won six World Championships in total (three Drivers’ titles with Tyrrell and one with Brawn GP, plus the 1971 and 2009 Constructors’ titles). In terms of race wins it has accumulated 43 victories (Tyrrell’s 33, plus Button’s Honda win in Hungary in 2006, Brawn’s eight and the recent Nico Rosberg win in China).

Based on these numbers one can understand that Mercedes feels that it should get a better historical deal than Red Bull Racing and that any deal that does not take this into account is unfair.

But is an unfair contract something which is illegal? The lawyers can argue that one, but it is really not the key point. What is perhaps more important is what Mercedes may or may not have done about it. If, for example, the car company was to write to the Formula One group, indicating that it believed the deal on offer was anti-competitive, under the terms of the European legislation, there would be a problem created with the Formula One IPO in Singapore. The rules of transparency in IPOs generally require those who embark on a flotation to give details of risk factors involved. So if there is a document that states that there could be trouble, it must be made public when the Formula One group starts trying to flog shares to investors. This does not mean that the IPO cannot go ahead, but investors are generally very conservative people and the concept of impending litigation from one of the world’s largest car companies is not something that they will want to see. The only way that this can be avoided is if a deal is done with Mercedes and they are satisfied with the offer, but if that happens there may be other teams that are not satisfied with being offered less. So a deal with Mercedes needs really to be done after all the other horse trading is over. The problem is that the Formula One group is in a wild hurry to go to the markets in July and there is not much time to quibble for weeks on end. This may explain the presence of Mercedes boss Dr Dieter Zetsche in Barcelona.

The precipitous nature of the flotation does beg another question:

Why?

What is so important about doing a deal in July when it would be wiser to get the Concorde Agreement all sorted out first? There cannot be some unexpected event coming, as the risk factors known to the company should also be known to investors. Would it not be more logical to wait until the summer holidays are over and the financial markets are firing on all cylinders again?

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Thanks for the post Joe. I admit I was waiting for a post like this. Indeed Mercedes do have the option to argue for a better deal, and if they do so, they do immediately put pressure on any IPO time line.

And the interesting question certainly is, as you state “why is this IPO scheduled so soon?”

Might it have to do with the origin of part of those shares that should become listed (the bankrupcy thing having to be concluded), or maybe a CVC thing when they have to commit to new loans / start new funds?

This looks like typical union busting from FOM. Giving a few powerful representative teams special deals so they abandon the rest of the teams and put the majority of power in the hands of FOM while keeping the teams weak. Like you mentioned, beyond Ferrari red bull mclaren and Mercedes, the other teams are utterly meaningless and have to accept whatever deal is put in front of them.

Mercedes would be wise to stand their ground, especially as RBR gets a seemingly unjustified deal.

If Red Bull = {Stewart + Jaguar} and Mercedes = {Tyrrell + BAR + Honda + Brawn} then Lotus = {Toleman + Benetton + Renault}, and can thus claim 4 WDCs, 3 constructors titles and 47 GP wins. This rather trumps both RBR an Merc, so why are they seen as “utterly irrelevant”? Are they still on the naughty step from Singapore ’08?

OK, sorry, didn’t mean to be cryptic! I will try to explain what I mean:

Your post states: “The remaining teams [other than Ferrari, McLaren, Williams and Red Bull] – with one exception [Merc] – are utterly irrelevant and must take whatever deal they are offered.”

However, Lotus F1 team’s “company number heritage” is better than either Merc or Red Bull in terms of titles and wins, due to their previous incarnations as Benetton and Renault.

I was thus led to wonder why they are seen as “utterly irrelevant”, and in particular whether this apparent lack of bargaining power is related to Renault’s “suspended exclusion” from F1 as a result of Singapore ’08?

not irrelevant, but just “in”. You move on to the next. Firms I worked with had a call roster of who could be counted on only to buy at steep discount at last minute, and we’d sell them fillers. Thing is, we never had any animosity, we just knew where they traded, and paid them less respect. So if Williams is on any kind of list like that, it is no disrespect to Williams, rather disrespect from Bernie, not to think they could be more important. This was another of my early plays, as the overlooked kid, junior to the teaboy practically, I was allowed to speak to such types, and find out how to sell them something better, for more.

I believe a good CEO has duties to his company, all of it. Jock stock and janitor. No CEO will sit there and be undermined, no matter loyalties. It’s not very legal, when a public or even a private company, either.

I believe AP was outvoted. Who outvoted him must have been very reluctant. I have to raise these matters, because they are of considerable wider importance. I’d have a right proper go at anyone who thought FW was bent, so don’t think I am going that way a second.

I say what I say, because I believe Bernie called the dogs out, and without any aspersion at all towards anyone, this one has stunk to high heaven since the resignation came out.

I better use something personal, to explain:

I myself once very very reluctantly agreed to what was pure blackmail, at a partner’s exhortation to keep things “clean”, not put our name in the press. I do not know to this day whether I should have held out. But the memory sears, ans I can get stinking angry or almost burt out, to this day, thinking about it. Sure, nobody knew . .I actually did have a veto vote. But I shall never know if my partner’s failing health did not discourage him to court battles, which rarely have happy endings anyway. I’m angry to this day I rolled over. Was I an employee, rather than the founder, I would have walked. I walked for so much less maths couldn’t describe. As a loyal partner to my few partners, I was tied in. I could not bet the farm, and their bread and butter. In the longer end, I could take no more, bought them out. That was my stupidest move, doing it that way around, I should have found a outside buyer. Then my cofounder passed, and virtually game over.

Full personal history available if anyone really asks, but I am hypersensitive to these issues as discussed. All things are rectifiable. My saga affected in the end only me, denuding the capital I had, and the potential to expand (chance to take a big investment went with my cofounder’s passing, sadly) and go hire people into decent jobs. I don’t rest easy, have not slept well with that wider consideration on my conscience ever since. Things can be remedied, but only if people talk, and when they talk they are aware of themselves and others. The one good thing I learned from my earlier shop was how to speak out and openly, even when it’s natural to hide away. I used to joke “it’s only a company!” to get chat started. Humor helps, but it’s real hard when there are sore heads. Still, catch it early, will you My Dear Circus! Just please shape up, the lot of you. Stop going “la la la what a wonderful season, sorry, don’t hear you!” because I genuinely, bottom of my heart, fear that there’s bad bad bad things afoot which will trip everyone.

Typical union busting strategy used by FOM. Give some powerful representative teams special deals so they represent only their own interests rather than the interests of the sport.

Mercedes would be wise to hold their ground and not let power be held in the hands of the few. The case of RBR is rather insulting to Mercedes when you think about it. Especially given Mercedes history and overall visibility a brand beyond F1

This company number heritage does not really exist, otherwise Toleman / Benneton / Renault / Lotus would also have relative heritage (TBH better than Mercedes, who have ancient history, and very little modern history, but leverage as engine supplier); or would Maserati or Alfa “trump” Ferrari?

But the judgment of what constitutes ‘heritage’ seems somewhat arbitrary.

I have to agree with shermanf1: “Typical union busting strategy used by FOM. Give some powerful representative teams special deals so they represent only their own interests rather than the interests of the sport.”

Also, a better financial deal is one thing, but a seat on the board for select teams is a little curious. If the principle of teams controlling the sport is conceded, why should the teams need anyone else to be involved ?

And in any event, does FOM add value to the sport equivalent to 50% of revenues ? Patently not, IMO.
Today they are merely rentiers, for all of Ecclestone’s bluster.

Cheers Joe, it makes more sense then. If Ferrari need a special deal for being the oldest, why is it that the second oldest team (McLaren) seem to be at the opposite end of the scale, and where decisions seem to favour Ferrari, there seems to be just a little extra punishment for McLaren. Given that both are road car manufacturers at a level where “win on Sunday, sell on Monday” will work, it is close to anti-competitive.

Don’t take this to imply anything personally nasty, or as even a serious criticism of MB, this is just my possibly highly sensitized and personal impression, but I sense a cold heart attitude around their corporate side.

That also extends to their motors. I bought their big arrogant motors because I wanted (juvenile) to be a big arrogant man. So it’s part of their implicit marketing culture also. Do you remember the cartoon, think is was in Road and Track, of a 600 driver, at the lights, ashing his whopping fat cigar from a exaggerated height over a Beetle coupe’s driver’s head? I grew up in such an arrogant school, that almost sold me. I since repent, so as said, these are very personal opinions of MB.

It may just come with the territory of having so much history. Same applied to my ludicrously privileged school friends. Only now, a good 4 decades later, has one warmed up to the warmer reality of life. There are others lovely people, sure, but only within the confines of establishment, or simulacra of establishment. They have not had their sapphire spectacles forcibly removed. (incidentally who warmed to life also did bloody well for himself, once he shed the scales over his eyes, made my year and gave me faith to see him after so long, and hear the story)

My first contact with MB was initiated (still a teen) on my desk opposite, wonderful German – French bloke, having this stonking argument with Jurgen Schrempp, yeah, really, we scalped for big names, matter of ego, as well as deal size, over anything. (we also had projects board types fancy)

Rae was saying “look, mate, you agreed that last week, where’s the paperwork?” The other end (I was listening in, beckoned to do so as Rae was one of several to take pity and take me under his wing) was saying “I said no such thing!”.

So Rae bluffed it, and said – repeating it all in English (reciprocated) for emphasis and my learning – “well, I had better call compliance and get the tapes transcribed”. Only then, did the faxed orders come barreling down the machine which sat between us as a jalousie. Ever since I have been a bit wary of MB’s company style. Good lesson in general, please note, way way way too many corporate cultures are like this. even in piddling firms.

One of my earliest memories, and I cast no aspersion on the other end of the phone, there was certainly an intent to haggle. Also, you have no idea how hard we closed deals back then. Many people called back to cancel just because they thought for sure we were on the con, so heavy did we hit. So very very often, big part of corporate failure, we got what I call emotive blowouts. This operation was selling some very well known sports titles at the time (had a contract with Bernie, natch) but we simply hated the agencies getting 15 or more percent for doing squat. That’s our livelihood right there! So, sure, we were harsh, and that caused any number of people for very understandable reasons to renege, despite the deal being fine.

What I am saying is, why would a big man rescind a honest deal they said they agreed to verbally? (note for those in the UK, aural deals are enforceable, only property cannot be dealt with verbally) The deal was for peanuts in any real sense of that word. I actually admire Shrempp in many ways, he was good, but when you get to the Chrysler deal, you start to wonder what the ego and ethos was that led to that mess.

. . .

TL;DR: I have good reason to agree with Obster above, MB’s board are neither fools, nor out of their depth, and add to that, they are not going to be easy to placate or budge.

Bernie might have made his match.

. . .

What reasons could MB have given for their exhortation to sell quick?

– “Get thee gone, we had enough (of you)”

fair comment, but maybe they want their own man, hmm?

– ” we need more money”

pull the other one

– “we want the deals that favor Ferrari stopped”

okay, i might want that also. Germans of course can be bent, but they have a heightened sense of the rule of fairness. (not going to start on Grib, or i’ll be all day) Also why should any competitor get more, when you have put in so much?

– “Mate, you’re for the high jump when this trial is done, we want you and all out of F1 asap”

now that is plausible. Rumor mills do work, and what a prosecutor knows is a very common thing to be discussed, ‘fraid to say, and I have a friend I have spent years getting to socalise less with judges he pleads before, on principle. (we nearly started a firm, vetoed by his wife when she fell pregnant, very understandably)

Just which big company wants egg on their face, now they have such a recently enlarged profile in the sport? (they are blanketing the German press at every opportunity)

If they do not have “inside information” they sure as heck know more than you and me.

– – –

Final possibility:

Maybe they read Joe’s blog and have come to the conclusion that there are very cool things to do with F1 which could genuinely make back the money. Maybe they might take a slice. They know that F1 can genuinely grow, can genuinely influence high end carmakers, and the luxury end (not the silly high end) is under assault. That is so strong a factor, they may well think it a marketing rear guard action. Think of it: F1 is considered arrogance, not just by the eco-sillies, so if you fix F1’s image, it all gets a boost. If, in doing so, you turn a profit, superb! They could easily do that arms length, by underwriting a trust.

MB might just be going for gold, not silver.

That gold, if they are really digging for it, could just be a golden heart, if that speculation of mine came true.

I’m reminded of this quote, when it comes to the inner workings of Bernie’s world:

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning” ~Henry Ford

. . . .

My pet conspiracy theory, tying in all the factors, is that Schumi was drinking with the Stuttgart boys, overheard or saw something he shouldn’t have. After all he’s a trusted fellow in their world. People speak more freely amidst the greats of any field. Later, over a few more too many by far he blurted, “another WDC you b’stards, deliver, or else I’ll squeal!” and so the Boys from Benz are hitting the Rubens Button, playing hardball, to test his nerves.

Fantasy theory aside, I would imagine ol’ Mikey to be one of the most trusted drivers on F1. More than anyone, it’s his life, warts, cheats and all. He was the money driver, not just for him and team, but arguable for all of F1, when last the sport tried to float. (note a little continuity here, did we not guess the bird was being fattened for sale?) A total insider.

Now what if he did know something about these tires. If he came out and said anything, he’s the most credible. If not universally so, almost, regarded as the technically most engaged and able of drivers. (right back to those pre and post race blood tests he’s do, a dedicated man indeed)

Except when loosing, then people will ignore him. We all enjoy a good bit of schadenfreude.

We all know how good a looser he is. Messes with his mind severely. So, wrecking his race would effectively silence him. I’m no believer in luck, except the rare “holy cow” kind, and neither is anyone serious about life I am aware of. Just what is the probability of so many race failures? I don’t know where to start the numbers, but with Michael, it’s a very small number indeed. Go ahead, say he’s just mad and bad, that’s what the gnomes at the Zurich bank who hold Bernie’s stash would say!

. . .

I’m only half in jest, because real effing nasty stuff goes on in any organization where the top starts playing silly buggers. Good people do get drawn in. State prosecutors envy fat jobs in the local big business, may have grown up desiring to end up there. . .As they saying goes, only men of steel and cockroaches survive. (under such conditions)

I’ll leave on a positive note, that Adam Parr has joined the ranks, currently numbering two, of CEOs I genuinely dream would take charge of my business. A man of steel, in my book. The other is Michael Woodford, ex- Olympus.

Was I even slightly better positioned, I would be off courting people like that, them, i mean, with my best “I have a dream” speech. On principle, not saying I run any size of outfit, just one has to try in life for what you admire.

What I read from this is that something or someone is pushing forward for a fast IPO before the Concorde Agreement to buy everything at banana’s price and sell them later with the obvius increase in value after the CA is concluded

Joe,
Bernie is negotiating from a significantly weakened position while FOM/CVC hold to a July flotation date. Mercedes can dig their heels in and cause the July date to be missed or if they stick to the date a big mess in the form of ongoing litigation appears in the prospectus. Kick Mercedes out and it is a floatation in an atmosphere of a big supplier just left. Win, Win Mercedes.

Bernie made a HUGE flub recently by punishing Force India with no appearance in the qualifying TV coverage. BAD mistake, the kind of dictatorial behavior the EU will see as anti competitive and Force India will come off as protecting their staff from danger. Mercedes as a huge German multinational must be able to really lobby hard at the EU and sink Bernie, FOM and ruin the party for CVC and cause enough of a stink to have the FIA running for cover for good measure. My guess is that CVC blinks and a big check and a place on the board is going to be assured for Mercedes and Bernie retires by year’s end if not by the floatation time. Bernie has done well for CVC, but if he pushes it to far then CVC have too much to lose.

Correct me if I am wrong Joe, but little is stacked up in favor of CVC while they stick to a July date. I don’t see a big stick for Bernie to use except saying no or paying up like he did for the other big names. In the end is the downside worth it? Failed or weakened floatation and reported to the EU?

Then part of me wonders if it does not serve Bernie well to derail a flotation??????

If there is no chit chat, within the law, as to when the schedule is planned, I’d be shocked. That’s just bad business. Same for any other team identified here as a true player.

What does transpire, to my thinking, is that MB had to call out publicly, because Bernie is being obtuse towards them. As much as anything, they want a prospectus out in the open. Although they can see Concorde (though I presume Chinese walls exist, keeping that to the race outfit, there are all ways to wink wink nudge nudge that can never be found out) they do not likely know much more than anyone as to the inner workings. Therefore they may be simply playing bluff. To be honest, I approve of that, if they are . .
They could of course have covered Grib’s defense attorney’s fees, giving them some wonderful advance info. There’s no legal secrets when a trial is in action, or very few. Now *that* would take this from casual theorizing to a proper plot!

The bluff is:

1. Bernie is saying, pay first, I’ll kiss you later. Like any good fallen and slightly older lady does, in the dim light.

2. MB is saying “stuff that, you got no references, come over here where I can see you, I want to know for sure this is going to be a bomb of a night!”

. .

my apols for cheapening the tone, but all heads abutted deals are pretty sordid, if you look at them a certain way. Maybe next year I’ll joke here about some of mine, I’ll be allowed to if they work out for both parties.

Adam, not for the same reasons, I am also wondering just how anything is in CVC’s favor.

The strongest argument is the scarcity of new equity issues, and the awful returns normal trading strategies can get drives this silly.*

Regards the FI coverage thing: I don’t think it ever worked any differently. However it has been the full court press this year and much of last.

= = Absolutely, given the number of tricks played out lately, and not so lately, I think Bernie is out of steam, far beyond just not having a new Concorde. He’s been rattled. So, agreeing broadly with Adam = =

Off to have a long quiet think. Sorry guys for the length of my comments, but these thoughts have been brewing for a very long while in my minds now, a good 6 months actively, and are just coming out.

best to all – j

*It was possible to make 30%+ trading US treasury bonds last year, of you times it right, and had a proper broker. But rather complex strategy.

Very interesting question, why rush something like an IPO when such a crucial building block to the business (concorde agreement) is still in flux and issues of succession have not been addressed.

Could it have something to do with Mr. E?…I mean this is complete speculation, but since the Concorde agreement is still in the air what is the next most critical element in the commercial rights business? In my view it would have to be the ability to negotiate and enforce the contracts with all the different parties, in other words, Bernie’s job. Could it be that CVC knows something about how long mr. E will be able to carry on with the task at hand?

…again total speculation, but what other matter could drive CVC to rush to market so quickly if a signed C agreement would probably raise a higher share price?

I worry for CVC actually. Not that I’m a fan, but I do. They own many companies that provide real jobs for normal people, and therefore I care.

Because I bet they are calling on so many favors, if this goes south, it will impact all their deal making and funds. They might have to start early or hasty disposals. Anyone, anyone, working for a CVC owned or part owned company ought to be watching this, for their own sake, fans or no.

More Questions than answers but I do agree with your points regarding Mercedes’s perceived historical worth to motor sport compared to Red Bulls. However tracing linage back through previous company names can only prove so much and tends to confuse more than inform! Red Bull’s F1 victories are in recent memory and Red Bull is currently regarded as a top team. At the same time most people don’t look back to 1999 and link Johnny and Jackie to Red Bull now or even less to Tyrrell – a top team in 69 to 73 and link Ken & Jackie with Merc now.
With the Enstone team name change taking hold will we be calling Renaults Lotuses in 10 years time in the same way as we are now apparently calling Tyrrells Mercs! (at least there is constant linage from Tyrrell to Merc and not just a new set of decals!). The thing is there is no linage at all from top team Merc in ’54/’55 and Merc now and none at all from Colin Chapman’s Lotus (real top team) to what we have now. I think Bernie understands this.
I need a lie down!

So you picked-up on my comment in an earlier thread about Mercedes media releases focused on the GP heritage? Good for you. They’ve got the facts to argue, but BCE is so ambivalent about OEMs in the sport, he fails to realize how many Fortune 500 companies would enter the sport just for that tie-in.

As far as the flotation and its timing is concerned, this is about monetizing the Lehman stake, since CVC funds were unable to exercise their right to acquire them because of different valuations.

ah, scratch that, too many obvious anyhow, so my instead my own take is this,

actually observation – if the guy wasn’t beating himself up for an audience, where would be the fun?

I reckon the consensus on that flick is it’s anti establishment, but what I saw was always a personal inner anger, because people do beat themselves up. If you do that, then you are at the mercy of who organises to exploit/

Strange things with consciences: people beat themselves up when they cannot articulate to themselves they are doing a wrong thing.

It’s kind of self regulating behaviour. Sure, it cannot be proved universally. But look at who succeed who failed because they bet too far. More on my theme, the lives of the truly rich seem to be exercises in emotional punishment. I’m very serious on this one, I have no actual belief in a God, save as translated through mankind, whose better actions are Godly, but there seems to be a Gaia Hypothesis as to limits of indulgence. Men who cynically succeed, so so and their cynicism become so part of their lives they fail to enjoy what their eyes behold, or react to the abominations they see. In a human way, we all fight to change everything for the better, it’s like in finance, you lay off a highly complicated hedge with good intentions, but the details come back to bite you in the arse.

Disclaimers: I am not religious, unless I can define that as wishing the next man well, and following the general idea of being good, and questioning everything. I am probably now a banker, as in I pursue complex trades which help publishers finance themselves. But as to how it bites you. a certain website called ZH just redeemed themselves with some actual analysis today, instead of their usual “buy nickels by the tonne, firearms and tinned food” hysterical pitch, which gets them lots of advertising, all of course automated so the advertiser do not notice they are likely mocked by their audience. Bit of a case study, for my profession, that.

I do not know if you understand finance lingo, but I believe any trade can be broken down to intelligible parts. Also, judging by the dimwits who from my class went into this (rich dimwits, not that they cared for the extra money) I reckon I could coach anyone in a scary short space of time, if you’re uncertain. No maths required, even.

I’ll link this, but also ask the question which has – far as I can see today – not been asked. “How does a index of 125 companies represent your business with millions of them nationally, and how can you trade one thinking it a proxy for the other?” Tooting my broken horn, I spent a lot of my life delving into micromarket theory, and the about 2.5 entities who tried at what I was doing fell of their own accord for such elementary misconceptions. I think we should call this the “CP Gen”, the ceteris paribus generation of hopeless believers and utter carny shysters. The said, is there is useful tools to be found.

Seriously, there is good to be found in unravelling messes, and this is my positive aim since the first job I took and loved was brought down by stupid management behaviour. Do not acquiesce to the Dilbert cartoon strip view of life. It is funny, but laughing at others ridiculing them, makes the enemy so much less fearsome. So they can slice you the easier. See Machiavelli!

What I am talking about, just like Fight Club, so in F1, it is too easy not to see the wood for the trees whilst you are hitting yourself. Charity begins at home. So does bad for your family and the world.

Only one recorded winner, other than Bernie. But one cannot really call what I am thinking of a fight; instead it’s someone who used Bernie and got clean away with the money, not Bernie’s money and he didn’t come to any harm except having to run about a bit putting new deals in place, anyway it was Nicola Foulston, she exited with a big bag of money and went to live in the sunshine.

No, as I wrote here few days back we could see Bernie re-marry very soon and retire from F1.

I don’t think the float is going to work and again as I speculated here before, PWC as administrators have an obligation and duty to sell both the Delta Topco and Delta Prefco shares held by the bankrupt Lehman Bros Ltd for the maximum possible return. This duty is countered by a claim that CVC has the right to veto any sale, though if this will overrule the bankruptcy laws of America remains to be seen. CVC cannot sell these until it has bought them back.
I suggested that Merc might be interested in buying those shares from the receiver/administrator or at least put in an offer and show lots of interest. It is a tactic that might make Bernie feel uncomfortable.

I agree that MB should buy those shares. Maybe that is what they want. I can’t imagine how grating Bernie’s style is to the minds of a Stuttgart board, but I imagine rather a lot. And with all their professed and real heritage in motoring, they have a true incentive to see this work out well. Maybe we are just witnessing a haggle.

Joe. is there anything in the romour that Ross brawn may have not been in spain because of this Concorde Agreement arguement that Merc are in with Bernie Ecclestone?

I read a while ago that theres a big rift between Ross brawn and Bernie Ecclestone?
Could it be that Mercedes are planning to take Brawn out of the picture like williams did with Adam Parr in order to strike a better deal with Bernie?

While F1 is always going to be full of conspiracy theories, I’ve always seen Ross Brawn as being both of enough integrity not to lie about being ill and of enough decency to manage being present at the same event as someone he dislikes without it being an issue.

On which basis, I’m happy to believe that he’s genuinely ill and that as fans rather than his family we have no right to private information on his medical situation. Get well soon, Ross.

f1 started in 1950 surley it would be easier to predate to 1950 and forget company number heritage, the idea of a team saying that they go back as far as e.g. dion buton of 1896. hmm, but ferrari are a team not to be trusted as far as fota was concerned, remember its not called the piranha club for nothing

For the court case, if Bernie had a growing concern it wasn’t going to go well but had no new cold hard facts to declare then would that need to be declared?

Financial crisis – would it have to be declared if it was believed that the Euro was about to collapse bringing with it a global stock market collapse, would the wish to get this over with before then need to be declared?

As for health problems, if the issue had not been diagnosed yet, and was just worrying symptoms currently, again would that have to be declared?

‘Impending next phase of the financial crisis’, that’s the reason for the hurry I could think about. maybe asian investors, which seems to be main target for that flotation, are expecting for even harder times for western economies in the middle term, and that somehow could cause devaluation of the whole F1 circus thing. just one very quick thought of mine about the question.

It’s likely that McLaren, Ferrari and perhaps Red Bull each have Most Favored Nation (MFN) clauses in their new contracts with CVC.

Under such a clause, were Mercedes to negotiate more money than McLaren, CVC would be required to increase their payment to McLaren, matching the amount paid to Mercedes.

That part isn’t terribly surprising or interesting. What would be interesting is if Ferrari had an agreement for MFN plus – say 40%. This sort of clause could demand that CVC pay Ferrari 40% more than any other team receives. Alternatively, Ferrari’s MFN could guarantee them a smaller percentage, but one formulated on top of total compensation among the teams at large. Were that the case, simply giving Mercedes an identical contract to McLaren and Red Bull would increase Ferrari’s MFN target.

Not only would CVC have to pay a much larger chunk to Mercedes, they’d then have to raise their compensation to Ferrari. Bernie might even try to use the existence of such fee escalators to dissuade Mercedes from asking for more money. Mercedes likely response would be; “not our problem”.

Mercedes have CVC over a barrel. They can hold up the public offering, possibly for years, certainly until the Gribkowsky trial has ended – which some suggest will result in actual charges against the F1 supremo. So long as Bernie is attached to the sport, Mercedes should have ample ammunition to keep a public offering from happening.

If Mercedes wants a deal, they’ll probably have it. CVC will open up their pocketbook and pay Mercedes not only what McLaren and Red Bull are getting, but probably more – then due to MFN, more again to McLaren, Red Bull, and and still more to Ferrari.

Perhaps Mercedes doesn’t want more money? Perhaps their goal is to end CVC’s hold over the sport? By threatening investigations, they could make the sport unpalatable to CVC’s fiscally conservative backers. Perhaps they could force CVC to sell the commercial rights to the teams?. Unfortunate as it is, this second possibility is unlikely. When CVC drops a pile of money at Mercedes door, the money will probably be taken and Bernie’s divide and conquer strategy will once more have robbed the teams.

Isn’t there another, possibly bigger, issue with Formula One group’s alleged treatment of Mercedes? If Mercedes, with all its heritage in motor racing, gets treated as ‘less relevant’, won’t that act as an enormous disincentive to other motor manufacturers thinking of getting into, or getting back into, Formula One? And if that is the case, surely Formula One group is shooting itself in the foot in terms of the value of its business and the price of its shares?

In the finance papers here in Australia.. A report was written about Channel 9 parent company and the debt .By Febuaray next year CVC need to come up wth 2.5 billion … So this IPO needs to happen this year.. Or bye bye 9 network

The urgency may be connected to the lehman brothers shares that are handled by the administrator. They will form the backbone of the IPO and there may be a deal with the administrator that is beneficial to CVC and time limited. CVC may have some options with a caveat that they IPO to a time line and pay a performance bonus if the IPO runs as predicted.

One should also keep in mind that Jean Todt FiA job runs out in fall. We do not know who will sit in his chair in November. So CVC could target the IPO to conclude and settle the market before they have to fear a veto by the FIA.

Joe, i think they are trying to float it before the EU goes to crap. Over here, in North America, the Greek and French elections have not gone over well. There is real fear of Europe going into the tank. The quicker the better to float before all the financial markets completely freeze. Just a thought.

“What is clear, from a statement made by the Formula One group, is that some of the teams have agreed “in principle” deals. […] The primary aim was to break up the unity of the Formula One Team Association (FOTA).”

But … why? I know, less unity among the teams means less collective power, and less collective power means a stronger position for Bernie. But surely there would be easier ways of breaking the teams up. If Bernie had done nothing, the RRA dispute would have taken care of everything for him, without him having to cut the teams in on ownership of the sport.

Maybe I’m just being as naive as I am optimisitic here, but when I see accounts of what Bernie has offered the teams, I cannot help but think that a major change is on the way. Bernie has never offered a stake in the sport before, so why start now? I hardly think sentiment comes into it, so my mind automatically shifts to the theory that there is something that Bernie wants, and the only way to get it is to cut some of the teams in.

Joe, it isn’t for mere mortals like us to try and work out how accountants and lawyers manage to use documents to bend reality. It is a thankless task and one I do not recommend! In this case you have been hoodwinked by them as you write that the team became Brawn GP in 2010 which is plainly false. In this case I suspect that you have misread the list of name changes at Companies House which shows what the company name was changed FROM not to. Regardless, it is clearly not correct as Brawn GP was long gone in 2010.

I wasn’t trying to sound dicky or tyring to anoy you by any means. I was merely pointing it out as it’s a simple mistake to make when you’re writing up heaps in a short amount of time and thought that pointing out a small slip that others might read wrongly should be pointed out for a quick edit.

If your info is correct, and I have no reason to doubt other than it seems weird. I went with the constructors names’.

Why would the team only become Honda GP after they had pulled the plug on F1? Sure if that was a part of the selling (similiar to Renault leaving Renault), but still there should then be another transition from BAR to Honda around 2005 which you didn’t mention. Otherwise it sounds from it your sentence that BAR only transferred the team to Honda several years after they started being called Honda and after Honda had been funding them.

Joe, hate to say it, but Anthony is right. If you look at the Companies House website, it says “Date” and “Previous Name”. Therefore, it changed to Mercedes GP on January 15th, 2010, and the previous name was Brawn GP. Likewise, it changed to Brawn GP on March 6th, 2009, and the previous name was Honda GP, and so on.

No Joe, on this occasion it is totally false. I bet you $500 that the company or team name did not change to Brawn GP in 2010. You must have misread the Companies House information because the company name was changed from Brawn GP to Mercedes-Benz Grand Prix at the end of December 2009 and it has not changed again since then. We all know that Brawn GP was not racing in 2010 so we don’t need proof that the team name was not Brawn GP in 2010.

I think that the powers that be may very well be playing with matches and highly combustible liquid. Mercedes Benz currently supplies engines for six cars in the current GP lineup.That’s 1/4 of the field. They’re not that important? The Mercedes-Benz Grand Prix team isn’t the only impact that Mercedes-Benz has on Grand Prix racing. Apparently the loss of Honda, Toyota, and BMW weren’t all that important to Mr. Ecclestone either? For Mercedes-Benz, Grand Prix racing is a large,form of advertising. As they are the primary sponsor of their own car, the enhanced revenue they get out of it comes through the showrooms of the Mercedes-Benz dealerships. However lets just say that it’s safe to say that there most likely isn’t any cash going back to Stuttgart from the teams winnings. I would also wager that the engine program, supplying McLaren, Force India, and Mercedes Benz isn’t a big money maker either, especially considering that 1/3 of the engines they supply are one way or another, given to their own team. Lets also not forget all of the promotional advertising Mercedes-Benz does, be it directly at the Grand Prix, or on the broadcasts all over the world. You can also bet your last penny that on Mercedes’ board of directors, there are quite a few company officers who are against the program, as we’ve seen with BMW, Toyota, and Honda. In certain circumstances, it really doesn’t take too much to upset the apple cart, particularly one which carries such a heavy load to begin with.The bottom line is that Dr. Z has a lot more pull than Mr. E is giving him credit for. If I were Dr. Z, I’d be telling Bernie “Look Bub, do you want us to stay or go?”